Reliance Industries Limited (RIL) has recently made headlines with its announcement of a 1:1 bonus share issue, approved by its board on September 5, 2024. This significant move marks the company’s first bonus offering since 2017 and is set to reward shareholders with one additional share for every share they currently own. As of October 16, 2024, Reliance has yet to announce the record date for this bonus issue, which will determine eligibility for shareholders.
Main Points
Key Details of the Bonus Issue
- Bonus Ratio: RIL will issue one new fully paid-up equity share of ₹10 each for every existing fully paid-up equity share of ₹10.
- Authorized Capital Increase: The company plans to increase its authorized share capital from ₹15,000 crore to ₹50,000 crore to accommodate this bonus issue.
- Financial Backing: The bonus shares will be issued by capitalizing from the company’s securities premium account, general reserves, or retained earnings as of March 31, 2024.
- Expected Credit Date: The bonus shares are anticipated to be credited to eligible shareholders by November 1, 2024.
This announcement is particularly noteworthy as it represents the largest-ever issuance of bonus equity shares in Indian equity markets. It aligns with Reliance’s tradition of rewarding shareholders and reflects its ongoing commitment to enhancing shareholder value.
Historical Context
Reliance has a rich history of rewarding its shareholders through bonus issues. This will be the sixth time the company has offered bonus shares since its initial public offering (IPO). Previous bonus issues occurred in 1980, 1983, 1997, 2009, and 2017, all demonstrating the company’s robust growth and profitability over the years. Notably, since the last bonus issue in 2017, RIL’s stock price has seen remarkable growth, rising from approximately ₹700 to over ₹2,900.
Market Reaction and Implications
The announcement has generated positive sentiment among investors. Analysts suggest that such corporate actions typically enhance liquidity in the stock market by making shares more accessible to a broader base of investors. Although the total investment value remains unchanged due to price adjustments post-bonus issuance, many believe that increased liquidity and potential future value appreciation will outweigh any short-term negative impacts on share prices.
Financial Performance
As reported in recent financial disclosures, RIL’s consolidated revenue reached ₹10 lakh crore (approximately $120 billion) for the year ending March 31, 2024. The company has shown resilience across various sectors including hydrocarbons, telecommunications, and retail. This diversified portfolio positions RIL favorably as it continues to expand its operations and market presence.
Looking Ahead
In addition to the bonus share issue, RIL’s chairman Mukesh Ambani has expressed ambitions for substantial growth in both sales and profits across its retail and telecom arms. This forward-looking strategy indicates that Reliance is not only focused on rewarding current shareholders but is also committed to long-term growth and value creation.
As Reliance prepares for this significant corporate action, shareholders and potential investors alike are watching closely for further announcements regarding the record date and other related details.
